New research from PensionBee, a leader in the consumer retirement market, reveals a deepening divide in the UK’s pension system, with millions of self-employed, gig economy and lower-income workers being denied the same chance of a secure retirement as those in traditional employment.
Lack of engagement is costing young people’s confidence
Of the most striking results of the survey of 1,000 UK adults working in the gig economy, was that only 16% of those earning under £15,000 report paying regularly into a personal pension, whilst less than half (46%) of those earning £100,000 or more save into a pension regularly.
One in five of those earning £15,000 or less say they will rely solely on the State Pension for their retirement, exposing them to a much higher risk of poverty in later life.
18% of those earning £15,000 or less say they simply cannot afford to save, while everyday living expenses are cited as the biggest obstacle to saving across almost every income bracket, pointing to the lingering impact of the cost of living crisis.
Young adults face the greatest affordability barriers, with nearly one in four (23%) 18-24 year-olds unable to save into a pension due to cost.
Reliance on family support is also widespread among the youngest savers; more than one in five (22%) expect to depend on family members in retirement, compared to just 3% of over-65s.
Confidence in retirement tracks closely with income, with just 18% of those earning under £15,000 say they feel “very confident” about their financial future, compared to 39% of those earning £100,000 or more.
This lack of confidence highlights more than just income disparities - it signals a system that does not yet make saving simple or engaging enough for those at the lower end of the earnings scale.
Better financial education, alongside a pension system that makes it easier for younger and lower earners to start and stick with their savings journey, could help build confidence and deliver stronger retirement outcomes over time.
A desire for change
The research also reveals appetite for reform across demographics. Flexible contribution models are consistently the most desired pension feature, with support particularly strong among those on lower incomes.
More than half of those earning between £15,000 and £19,999 say the ability to “contribute small, flexible amounts” would make them more likely to save into a pension.
With the revived Pensions Commission tasked with charting a path towards adequacy, these findings highlight the urgent need for reform, including giving the self-employed an easy and accessible opportunity to opt in to having pension contributions deducted from their self-assessment tax return and providing flexible contribution options.
Lisa Picardo, Chief Business Officer UK at PensionBee, commented: “While auto-enrolment has transformed retirement savings for millions of employees, millions of others remain excluded from the system, particularly the self-employed.
“These workers deserve the same chance to build a secure retirement, but face additional barriers when it comes to starting and sustaining contributions.
“For those outside the auto-enrolment net today, the important message is that it is still possible to take control.
“By setting up a personal pension and making flexible contributions when they can afford to, the self-employed can begin their own savings journey and build confidence along the way.
With the right tools and support, small, consistent steps can make a real difference to long-term retirement outcomes.”
